Karachi, April 12, 2019 (PPI-OT): Weekly Review
The market performance during the outgoing week remained under pressure, where KSE-100 index troughed at 36,579 points mid-week, lowest level since PTI’s government came to power. The market rumour of a potential price war in cement sector led to a further drag on the market performance. Meanwhile, a delegation led by Finance Minister Asad Umar reached Washington for crucial discussions on an IMF program, on 8th April’2019. The discussions are expected to last till 15th April, which will be followed by official announcement of amnesty scheme. The government, which has yet to take stringent steps on the fiscal side, is expecting to raise PkR120-150bn from the Amnesty scheme.
The news flow during the week included: 1) Pakistan, IMF at odds over PkR5.4tn tax collection target vs. 4.0tn collected in FY18, 2) IMF’s forecast for Pakistan’s GDP growth rate to remain at 2.5% till 2024, and fiscal deficit to peak at 8.7% of GDP in FY20, without reforms, 3) government mulling over a gas price hike of 20-42%, effective Jul’19 to reduce losses incurred by gas companies in the outgoing financial year, 4) trade deficit declining by by 14% in 9MFY19 due to sharp currency devaluation since Dec’18, despite 5) flattish exports during 9MFY19, posting an especially bad performance during Mar’19 (down 11% YoY), and lastly 6) autos sales, which remained flattish at 160K units during 9MFY19, with cars of 800cc and below did exceptionally well due to removal of non-filer ban in Mar’19.
Top performers during the week included HUBC (+5.77%), PSO (+4.62%) and NBP (+4.06%), while CHCC (-16.4%), PIOC (-15.6%) and MLCF (-14.1%) remained the worst performers. Average daily turnover increased 25% WoW to 148mn shares, led by 1) KEL (57.98mn shares), 2) WTL (50.63mn shares), 3) MLCF (47mn shares), 4) FCCL (46.28mn shares) and 5) BOP (42.95mn shares).
The market during upcoming week is expected to be dominated by further news flow regarding development on IMF program, announcement of another Amnesty scheme and submission of FATF’s third implementation report on 15th April. The result season has started on a weak note, with APL posting below expected results, and will continue to hold sway over market performance.